Refugees and migrants in Latin America and the Caribbean benefit local economies, new studies show

Forcibly displaced people in Latin America and the Caribbean can contribute significantly to the economies where they live if they have the opportunity, according to two new studies released by the World Bank (WB), the Inter-American Development Bank (IDB), the Organisation for Economic Cooperation and Development (OECD), and the UN Refugee Agency, UNHCR.

Refugees and migrants are filling important gaps in local labour markets and boosting the demand for goods and services, which may increase tax revenues and raise the Gross Domestic Product (GDP) of receiving countries. However, they often find themselves in vulnerable situations.

Although the majority of this population is of working age, has a high level of education and is in employment, they are frequently overqualified for their jobs and engaged in informal activities, limiting their wages, and exacerbating their food insecurity.

The studies, “Venezuelans in Chile, Colombia, Ecuador and Peru – A Development Opportunity” (WB and UNHCR) and “Socio-Economic Integration of Forcibly Displaced Populations in Latin America and the Caribbean” (IDB, OECD, and UNHCR), are part of inter-agency cooperation to respond to the needs of forcibly displaced people. They highlight how targeted policies can ease access to formal labour markets and basic services, such as education and healthcare, to enable refugees and migrants to better contribute to their host countries.

“Population movements can benefit host communities and countries if the right policies are implemented,” says Carolina Mejía Mantilla, author of the study conducted by the World Bank and UNHCR. “Targeted policies that promote their economic inclusion in labour markets, grant them access to basic services, and foster their social inclusion are essential to materialize these benefits,” she adds.

Studies estimate GDP growth among the largest recipient countries in Latin America and the Caribbean to be an average of 0.10 to 0.25 percentage points a year between 2017 and 2030. “The Venezuelan exodus appears to have had a positive effect on economic growth in the region, thanks to additional labour supply and the boost to demand,” reports the World Bank-UNHCR study.

The flow of displaced people across the Americas has surged as violence, insecurity, inequality, and human rights violations persist. As of mid-2023, according to UNHCR, there were 22.1 million displaced people in the Americas. Latin America and the Caribbean accounted for approximately one third of all new individual asylum applications globally.

Encompassing forcibly displaced populations in Chile, Colombia, Costa Rica, Ecuador, Mexico, and Peru, the study by IDB, OECD and UNHCR reveals that forcibly displaced youth have more difficulty than their native-born counterparts in remaining in education and finding jobs. Displaced children attend school at lower rates and drop out more frequently than nationals, which has implications for generational integration. Additionally, women have lower employment rates than men, both native-born and displaced.

As part of this inter-agency cooperation, the studies undertaken are a good example of how international financial institutions and development actors have the influence, technical expertise, and financial resources necessary to enhance public services and employment prospects in countries hosting forcibly displaced populations. These publications represent a critical step toward fostering solutions and ensuring the full socio-economic inclusion of this population in host countries.

The studies also highlight how xenophobia and discrimination may negatively impact on the socio-economic inclusion of refugees and migrants and can diminish their ability to participate in host communities.

The study by the World Bank and UNHCR found that the majority of Venezuelans desired to remain in their host country. However, their participation in the community was limited primarily to religious activity - despite shared language and cultural ties. In the four host countries, 26 to 40 per cent of Venezuelans reported instances of discrimination, particularly women and youth.

This was also reflected in the IDB/OECD/UNHCR study, which found that in Chile, Colombia, and Peru, approximately 30 per cent of displaced individuals reported discrimination based on their origin. The World Bank/UNHCR study recommended that government policy promote social cohesion, prevent exclusion, and minimize adverse impacts on local populations.

Although these studies serve as the most comprehensive available source that compares refugees and migrants with the native-born population, more systematic inclusion of refugees and migrants in official data collection exercises is imperative to effectively inform and improve public policies.

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This story was first published to UNHCR website.